The Hindu Business Line : Food for thought

India has the potential to be the world leader in the trade of processed fruits and vegetables. And for this it has to develop efficient marketing and export networks. Latha Venkatraman surveys the scene.

INDIA is one of the largest producers of fruits and vegetables, but the country's share in global trade of processed fruits and vegetables is under 1 per cent.

For several years, the government has been talking about investment opportunities in the food processing industry. It has identified openings, particularly in fruit & vegetable processing, meat, fish & poultry processing, packaged, convenience food and drinks and milk products.

The Web site of the Ministry of Food Processing is clearly positioning India as an important destination for food processing. It states that the country has one of the largest livestock population in the world. Fifty per cent of the world's buffaloes and 20 per cent of the cattle are found in India, most of which are milch cows and milch buffaloes. In 2002-'03, the livestock sector produced 86.4 million tonnes of milk, 41.7 billion eggs, 52.1 million kg of wool, 4.94 million tonnes of meat and 6.2 million tonnes of fish.

The country is the largest global milk producer, with production during 2002-'03 at 86.4 million tonnes. It is the sixth-largest producer of fish and the second-largest producer of inland fish. Total fish and marine product output stood at 6.2 million tonnes during the same year and exports in value stood at Rs 6,683 crore.

However, the government agrees that it is necessary to improve cold storage and transportation facilities and develop efficient marketing and export networks to optimise production and export potentialities for these products.

"Food management is inefficient, with unsustainable level of food subsidies imposing a heavy burden on government finance," the Economic Survey of 2003-'04 said. The rural economy and the private sector lack the basic infrastructure to build sufficient bugger stocks and the country remains vulnerable to weather shocks, it said. Considering the number of problems faced by the food processing sector, the government plans to set up a national-level taskforce and several state-level ones to addressing the sector's problems.

The Ministry is also expected to conduct a comprehensive study on the impact of combined Central and state taxes on the sector. It had financed the setting up of 45 food parks but their performance has not been up to expectations.

The government has expressed its desire to create a single law and a single regulatory authority for the entire food processing sector.

Some of the initiatives taken to facilitate its growth include de-licensing of the sector, barring a few elements such as alcoholic beverages, 100 per cent FDI allowed via the automatic route and zero excise duty for processed fruits and vegetables.

Recently, the government announced the launch of a National Horticulture Mission (NHM). The Rs 15,000-crore NHM is expected to run through a five-year period, starting 2005.

The main aim of the mission is to provide, among others, food processing facilities and cold storage to prop up cultivation of these commodities.

It also wants to usher in private participation in its activities. To this effect, the government plans to table amendments to the Seeds Act in Parliament.

Imaging: K. Balakrishnan

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